UN Security Council Sanctions Lists: Client Failure to Screen Against Relevant Lists

A recent investigation has revealed that a client failed to screen against relevant United Nations Security Council Sanctions Lists upon account opening and update, raising concerns about the effectiveness of its anti-money laundering (AML) and combating the financing of terrorism (CFT) controls.

Investigation Findings

According to sources, the client was found to have not conducted the necessary screening checks on its customers against the UN sanctions lists, which are designed to prevent the transfer of funds to entities or individuals involved in terrorist activities or other malicious activities. This failure has led to questions about the client’s compliance with international AML/CFT standards.

Compliance Shortcomings

The investigation also revealed that the client had not demonstrated effective risk mitigation measures as required by the Financial Intelligence Centre (FIC), which is responsible for overseeing AML/CFT compliance in the country.

Here are some of the specific shortcomings identified:

• Failure to identify and report suspicious transactions
• Inadequate customer due diligence
• Insufficient training for employees on AML/CFT procedures

FIC Assessment and Remedial Measures

The FIC conducted an assessment of the client’s compliance, which resulted in several material exceptions. The agency instructed the client to implement remedial measures to address these shortcomings.

Here are some key points about the remedial measures:

• The client is required to periodically report on its progress in implementing these measures
• The FIC reviews these reports to gauge the effectiveness of the remedial measures and may seek an audience with management or conduct additional assessments if necessary
• If the client effectively mitigates ML/TF/PF risks, the FIC may advise that periodic reporting cease; otherwise, enforcement action may be taken

Compliance Ratings

The FIC’s assessment methodology has been revised to include a compliance rating system, which rates the levels of risk mitigation achieved by financial institutions. In this case, the client failed to demonstrate effective risk mitigation measures, resulting in a lower compliance rating.

Here are some key points about the compliance ratings:

• The FIC will continue to monitor the client’s progress in implementing remedial measures and will take enforcement action if necessary
• The compliance rating system aims to provide a more comprehensive picture of an institution’s AML/CFT controls and progress over time

Conclusion

The failure of the client to screen against relevant UN Security Council Sanctions Lists highlights the importance of effective risk mitigation measures in preventing money laundering, terrorist financing, and other financial crimes. The FIC will continue to monitor the client’s progress in implementing remedial measures and take enforcement action if necessary to ensure that international AML/CFT standards are upheld.